Jefferies Finance LLC

As a result, JFIN Parent's consolidated leverage, as measured by debt to ATE, was 6.6x as of May 31, 2023, above our downside threshold of 4.5x, but we expect the company to take measures to lower it in the next few years. The negative outlook reflects the possibility that we will lower the rating in the next 12 months if the company cannot make substantial progress in reducing leverage toward or below 4.5x. Our outlook also considers that JFIN will maintain adequate liquidity, with no material deterioration in asset quality, and will have ongoing support from Massachusetts Mutual Life Insurance Co. (MassMutual; AA+/Stable/A-1+) and Jefferies Financial Group Inc. (BBB/Stable/--), which together own JFIN Parent. We could lower the ratings in

...Our ratings on Jefferies Finance LLC (JFIN) reflect its concentration in leveraged lending and exposure to market and credit risks due to its originate-to-syndicate and investing strategies. These risks are partially offset by the implicit support to JFIN from Jefferies Financial Group. On a consolidated basis, debt to adjusted total equity (ATE) at JFIN Parent LLC is above our expectations, but we anticipate the company will take steps to reduce it. JFIN's holding company, JFIN Parent LLC reported a significant decline in ATE in the second quarter of 2023, after taking possession of the bankrupt beauty company Forma Brands LLC (not rated). As a result of this transaction, the company recognized goodwill and intangibles of $602 million on a consolidated basis, which we deduct from our calculation of ATE. As a result, JFIN Parent's consolidated leverage, as measured by debt to ATE, was 6.6x as of May 31, 2023, above our downside threshold of 4.5x, but we expect the company to take measures...

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